Paying off early

[Air00Max]

I just made my 1st payment on the plan, and the plan includes the payment of my wife's car loan. I'm on a 50 month plan, but would like to pay it off in the minimum required of 36 months. Question is, do I only have to pay off the amount that was going to unsecured creditors? That is around $16,200...or do I have to pay off the entire amount, including my wife's car? I want to be DONE with this in 35 more payments. Also, to pay it off in 36 months, can I send the trustee the add'l money every month on top of my minimum payment? Or should I hang onto that extra money, and pay them all in one lump sum on the 36th month???

[momofthree]

Are you in a 100% plan?

[Air00Max]

11% of my debt is being repaid...I was told that if I pay it off BEFORE 36 months, I would be responsible for paying all of the outstanding debt that was filed on...so obviously I don't want to do that.

[momofthree]

I was under the impression that early payoff in non-100% plans was abolished in the 2005 bk overhaul.

On the U.S. Courts website ( http://www.uscourts.gov/FederalCourt...Chapter13.aspx ), it states the following:

The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under chapter 7The applicable commitment period must be three years if current monthly income is less than the state median for a family of the same size - and five years if the current monthly income is greater than a family of the same size. The plan may be less than the applicable commitment period (three or five years) only if unsecured debt is paid in full over a shorter period.

However, if your attorney has found some loophole that allows you an early buy-out at your current payback percentage once you've hit the 36-month mark, then hold your money until then, or risk it simply increasing your payback percentage...

Is it maybe that you're under median income and simply needed a longer time frame to pay off your minimum? If that's the case, you may be able to modify your plan to increase your payment & shorten it to 36 months...

[Flamingo]

Prior to the new law passage in October 2005, after 36 months of payments in a Plan one could investigate, if able, buying out of the plan early at the confirmed percentage rate. The new law changed all that and if one wants to buy out of their Plan early, it would be at 100%, not at the confirmed percentage rate (in the OP's case, 11%).

[momindebt]

Funny because we were under the impression that we could not pay extra to pay off our plan earlier when we started. But, we recently received paperowrk from our trustee that we could make extra payments and pay off our plan early. In fact, we were encouraged to do this if financially able with wage increases, etc. so we could pay less of a trustee fee and interest and pay off the plan earlier... Seems to directly contradict law above. Looks like we need to do more investigating because this is something we seriously were hoping to do....

[papie]

Be very, very careful sending in extra cash to your trustee. I suggest that you speak to your lawyer about this issue. This is what I've learned from conversations with my lawyer:

If you're in a 100% and you want to pay extra- great. When the debts are 100% paid, the plan ends.

If you are paying less than 100% and send in extra, the trustee will increase the payment to unsecured creditors. The plan wouldn't be paid off sooner, your unsecured creditors would just be getting more money. It's possible you weren't eligible for a three year plan with your income, debt, etc. which may be why they didn't offer you that option to begin with.

I understand your desire to get this all over with in 3 years, but the fact is that over the course of 5 years you're still only paying in 11% of your debt. I'm not sure most trustees are going to let you off the hook after only three years, even if you do manage to make that extra two years worth of payments in the first three years of the plan. A chapter 13 plan isn't like an auto loan, the total amount to be repaid can be adjusted. It's not a "final" number.

All trustees are different though and maybe your lawyer can find a way around that? It's always worth a shot.

[ABC]

How does this question relate to paying a car off early that is being paid directly ?

[RunningMan]

We have a car that we are paying for outside the plan payment. It will be paid for in two years, three years before the end of our plan. The trustee asked that our plan payment increase by that amount once the car is paid off.

[ABC]

We have a car that we are paying for outside the plan payment. It will be paid for in two years, three years before the end of our plan. The trustee asked that our plan payment increase by that amount once the car is paid off.

Mine had over 5 years left so that is why it was excluded originally. Thanks for the info. I guess I won't pay off early until I get much closer to the end date.

[CCB35]

i was advised by my attorney not to send extra money,because if you do the trustee will think you have extra money to fund the plan and may try to change your payment amount.

[espo1357]

i was advised by my attorney not to send extra money,because if you do the trustee will think you have extra money to fund the plan and may try to change your payment amount.

great advice.

Trust nobody, except maybe your mom, dad, and wife. Everyone else is suspect. And in that order too.

LOL.

[papie]

How does this question relate to paying a car off early that is being paid directly ?

It depends on your plan. I have an auto loan outside our plan that was on schedule to be paid off about a year and a half after we filed. We were able to opt for a three year plan and asked our lawyer to make it one solid higher payment so we could get it paid off in three years. (The original plan was five years, with the plan payment increasing the month after the car was to paid off.)

It ultimately depends on what you have worked our in your individual plan. If your plan was originally confirmed with the auto outside the plan, they probably laid out your plan payments situated around the month your auto is to be paid off.

I would call your lawyer and check, it's always nice to have a few extra dollars per month.